Tag Archives: Humana

Walmart reportedly in negotiations to buy Humana

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Deal has been long speculated since announced $69 billion merger between CVS Health and Aetna.

Walmart is in preliminary negotiations to buy Humana, The Wall Street Journal has reported.

There are few details in the potential deal that has not been announced publicly by either the retailer or the insurer.

But speculation has existed among industry analysts for months after the announced $69 billion merger between CVS Health and Aetna.

Two years ago, Aetna was in a proposed $34 billion deal to buy Humana.

Walmart is facing increased competition from such an integrated pharmacy business and is currently in an arms race against Amazon as the online giant has made strides into the Medicaid market by offering those beneficiaries a discounted Prime membership.

Humana specializes in Medicare Advantage plans for seniors, a fast-growing demographic as baby boomers enter retirement age.

The Centers for Medicare and Medicaid Services has shown support for MA plans, said David Friend, MD, chief transformation officer of The BDO Center for Healthcare Excellence & Innovation.

Friend predicts that due to the partnerships and mergers between healthcare companies, retailers and insurers, the traditional pharmacy benefit model could become extinct.

“The CVS-Aetna merger was a watershed moment in healthcare. But Walmart-Humana signifies the beginning of the avalanche that will cause the entire healthcare system to converge,” Friend said by statement. “And as this deal signifies, the healthcare organization that accurately captures and analyzes the data of the fast-growing U.S. demographic — seniors — stands to lead the industry of the future.”

 

Study: ‘Big five’ insurers depend heavily on Medicare, Medicaid business

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https://www.fiercehealthcare.com/cms-chip/big-five-insurers-medicare-medicaid-growth-profits?mkt_tok=eyJpIjoiT0RnMFkySXdPV0psWldSaCIsInQiOiJQSllQNlpcL2RhTzBDZFwvZXh5M1ZUSDJyUU5JTGw3dnh1QTVac01rZUFcL2pNUUhhMXBaQjBxK29ScHRrOHhsT3d6aE5pcFRJUWd4Sm0rYXA4S0RYVGE2N0czN2hhc2hsXC9EZk9mSGVLR0V1UFlwVDZpQmdkcll0eTBMNDUzTHlIZDIifQ%3D%3D&mrkid=959610&utm_medium=nl&utm_source=internal

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Even as they’ve retreated from the Affordable Care Act exchanges, the country’s biggest for-profit health insurers have become increasingly dependent on Medicare and Medicaid for both profits and growth.

In fact, Medicare and Medicaid accounted for 59% of the revenues of the “big five” U.S. commercial health insurers—UnitedHealthcare, Anthem, Aetna, Cigna and Humana—in 2016, according to a new Health Affairs study.

From 2010 to 2016, the combined Medicare and Medicaid revenue from those insurers ballooned from $92.5 billion to $213.1 billion. The companies’ Medicare and Medicaid business also grew faster than other segments, doubling from 12.8 million to 25.5 million members during that time.

All these positive trends, the study noted, helped offset the financial losses that drove the firms to reduce their presence in the individual marketplaces. Indeed, the big five insurers’ pretax profits either increased or held steady during the first three years of the ACA’s individual market reforms (2013-2016). Their profit margins did decline during those three years, but stabilized between 2014 and 2016.

Not only do these findings demonstrate the “growing mutual dependence between public programs and private insurers,” the study authors said, but they also suggest a useful policy lever. The authors argued that in order to help stabilize the ACA exchanges, federal and state laws could require any insurer participating in Medicare or state Medicaid programs to also offer individual market plans in those areas.

Nevada has already done something similar: It offered an advantage in Medicaid managed care contract billing for insurers that promised to participate in the state’s ACA exchange. The state credited that policy with its ability to coax Centene to step in and cover counties that otherwise would have lacked an exchange carrier in 2018.

It’s far less certain, though, whether such a concept will ever be embraced at the federal level during the Trump administration, since its focus has been on unwinding the ACA rather than propping it up.

Either way, recent events underscore the study’s findings about how lucrative government business has become for major insurers. One of the main goals of CVS’ proposed acquisition of Aetna is to improve care for Medicare patients, which would help the combined company “be more competitive in this fast-growing segment of the market,” CVS CEO Larry Merlo said on a call this week.

Aetna CEO Mark Bertolini added that the transaction has “incredible potential” for Medicare and Medicaid members, as the goal is to provide the type of high-touch interaction and care coordination they need to navigate the healthcare system.

 

We’re on the brink of a health care M&A binge

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CVS Health is extremely close to cementing its $66 billion takeover of Aetna, the Wall Street Journal reported yesterday. It’d be the biggest deal of the year, and Axios’ Bob Herman notes that more health care deals could also be in the offing:

  • Humana recently altered its executive compensation and severance policies in case the health insurer is bought out or merges with another company. Wall Street views Humana as a ripe acquisition target for Cigna because of Humana’s huge Medicare business.
  • Express Scripts is about to lose its large, lucrative pharmacy benefits contract with Anthem. Express Scripts’ CEO said at a Forbes health care conference yesterday he “would be open” to striking a merger deal with a health insurer or partnering with Amazon.
  • Catholic Health Initiatives and Dignity Health, two large hospital systems, likely will provide more details into their merger discussions when they chat with bondholders next week.

Get smart: Health care mergers and acquisitions have been in vogue for years, and big deals would be almost certain to happen if Congress also passes its tax cut bill — which would give companies more money to play with through vastly lower corporate tax rates.

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1 in 3 People in Medicare is Now in Medicare Advantage, With Enrollment Still Concentrated Among a Handful of Insurers

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Medicare Advantage 2017 Spotlight: Enrollment Market Update

Medicare Advantage plans have played an increasingly larger role in the Medicare program as the share of Medicare beneficiaries enrolled in Medicare Advantage has steadily climbed over the past decade.  The trend in enrollment growth is continuing in 2017, and has occurred despite reductions in payments to plans enacted by the Affordable Care Act of 2010 (ACA).  This Data Spotlight reviews national and state-level Medicare Advantage enrollment trends as of March 2017 and examines variations in enrollment by plan type and firm. It analyzes the most recent data on premiums, out-of-pocket limits, and quality ratings.  Key findings include:

  • Enrollment Growth. Since the ACA was passed in 2010, Medicare Advantage enrollment has grown 71 percent. As of 2017, one in three people with Medicare (33% or 19.0 million beneficiaries) is enrolled in a Medicare Advantage plan (Figure 1).

 

  • Market Concentration. UnitedHealthcare and Humana together account for 41 percent of enrollment in 2017; enrollment continues to be highly concentrated among a handful of firms, both nationally and in local markets. In 17 states, one company has more than half of all Medicare Advantage enrollment – an indicator that these markets may not be very competitive.

 

  • Medicare Advantage Penetration. At least 40 percent of Medicare beneficiaries are enrolled in Medicare private plans in six states: CA, FL, HI, MN, OR, and PA. In contrast, fewer than 20 percent of Medicare beneficiaries are enrolled in Medicare Advantage plans in 13 states, plus the District of Columbia.

 

  • Premiums and Cost-Sharing. While average Medicare Advantage premiums paid by MA-PD enrollees have been relatively stable for the past several years ($36 per month in 2017), enrollees may be liable for more of Medicare’s costs, with average out-of-pocket limits increasing 21 percent and average Part D drug deductibles increasing more than 9-fold since 2011; however, there was little change in out-of-pocket limits and Part D drug deductibles from 2016 to 2017.

Medicare Advantage enrollment is projected to continue to grow over the next decade, rising to 41 percent of all Medicare beneficiaries by 2027.1  As private plans take on an even larger presence in the Medicare program, it will be important to understand the implications for beneficiaries covered under Medicare Advantage plans and traditional Medicare, as well as for plans, health care providers and program spending.

Standard & Poor’s puts Aetna, Humana on credit watch following DOJ move to block merger

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S&P Global Ratings has placed Aetna and Humana on creditwatch following the Department of Justice’s announcement Thursday to block their merger.

S&P said it has placed its ratings on Aetna on creditwatch with developing implications, and on Humana and its core subsidiaries on creditwatch with negative implications.

The DOJ also blocked the merger between Anthem and Cigna on Thursday.  S&Psaid its ratings on the two insurers would remain on creditwatch negative, where they were placed on June 21, 2015.

Anthem and Aetna have both said they would fight the DOJ’s injunction against their respective mergers in court.

For Anthem’s proposed $53 billion acquisition of Cigna, litigation could be difficult and time-consuming, S&P said.